Abstract

More than half a decade after the outbreak of the greatest economic crisis since the Great Depression, the world economy is still facing serious difficulties. Much more than during a ‘normal’ recession, the Great Recession of recent years has uncovered serious structural problems in the world economy and has brought about levels of unemployment unprecedented in modern times (Elsby et al. ). It first became clear that the financial sector had become in effect self-referential and too much removed from its traditional role of allocating finance throughout the whole economy (Menkhoff and Meyer, ). Following this, the structural weaknesses of the Euro were exposed leading to serious questions about the long-term sustainability of the most ambitious currency union ever attempted.